Hi, first want to thank for this forum, what a wonderful resource.
I need some advice and I feel like neither my accountant in US nor the one in Canada have much of US/CDN tax experience. So, I'd like to research a bit on my own and relieve some of my anxiety.
Some facts:
1. In mid 2010, I got a great IT business opportunity and we moved to Canada and received our PR cards on landing. We are planning on applying for Canadian citizenship in 2 years
2. My US green card was issued in mid 2004 (but I lived in the US from 1999-2010)
3. My wife is a US Citizen. She will not be working in Canada.
4. My Canadian accountant has already filed my first CRA for 2010
5. My US accountant is finalizing the 2010 1040 (we are on extension till Oct 15th)
I believe that when a US permanent resident acquires PR from Canada, you are considered that you abandoned your US PR. I do not plan to maintain my GC, and I will not be going to US every 6 months to try to keep the GC, so I wish to just let it "expire" (of course my wife, as citizen, will file every year?, although she will have no income)
While I don't mind losing my GC, now that happily living and working in Canada, if let's say 5 or 10 years down the line, I want to follow my wife back to US (and will re-apply for a new GC at that time, under marriage visa), I want to have that option available. (I need to make sure that I don't mess something up with IRS and be inadmissible to reply for a new GC)
Some of my questions are:
a) which forms do I need to file with IRS each year? 1040 for first year? 1040NR thereafter?
b) what about my wife, as she is a non-working US Citizen living as Canadian PR
c) do you recommend that my wife and I file join or separately?
d) I read that there is a $90k exemption to protect against double taxation.
e) any other advice you can offer for my situation.
Thanks again in advance!
please advise which would be most strategic way to go
Moderator: Mark T Serbinski CA CPA
You are not considered to have abandonned your GC... yet. But, unless you have filed an I-131 return permit, and even then this does not guarantee anything, you will certainly lode your GC in the coming months.
It was a big mistake for you not to have applied for US citizenship, now, as you say, you will need to reapply if your wife ever decides to live in US (and then you could only follow, not immediate).
You should probably proactively renounce your GC soon (even before end of year)
As to your annual filing. Your spouse will of course continue to file 1040, and you may join her on that. Otherwise once you file a final 1040 you do not have to file anything unless you have US source income (in which case you will file with her most likely).
Sad.
It was a big mistake for you not to have applied for US citizenship, now, as you say, you will need to reapply if your wife ever decides to live in US (and then you could only follow, not immediate).
You should probably proactively renounce your GC soon (even before end of year)
As to your annual filing. Your spouse will of course continue to file 1040, and you may join her on that. Otherwise once you file a final 1040 you do not have to file anything unless you have US source income (in which case you will file with her most likely).
Sad.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I dont mind losing the US GC. I just want to maintain a option to apply for new GC (10 years from now) through my wife by not screwing up with my filings.
what does it mean to proactively renounce GC? How is it done? do i have to do it this year? or can i do it next year? i wish i could just be deemed renounced.
re: us source of income. I have setup a CDN corporation which does business with US companies (internet based revenues). that doesnt mean that i personally have US source of revenues, does it?
besides that i have an llc in US, which had a loss in 2011 and I will file for its dissolution this year.
and finally, i have a SEP IRA with about $40k in it in US . what do i need to do with it?
what does it mean to proactively renounce GC? How is it done? do i have to do it this year? or can i do it next year? i wish i could just be deemed renounced.
re: us source of income. I have setup a CDN corporation which does business with US companies (internet based revenues). that doesnt mean that i personally have US source of revenues, does it?
besides that i have an llc in US, which had a loss in 2011 and I will file for its dissolution this year.
and finally, i have a SEP IRA with about $40k in it in US . what do i need to do with it?
In order to avoid issues at the border, you should formamly renounce your GC. Otherwise, you will get pulled over at some point soon, when you show them GC and they determine you live in Canada.
Unless you formally give up GC -- even if it is confiscated - -you must continue to file a full 1040 (your wife does also of course).
If you do renounce, then you have no need tofile unless you have US income, and then only a 1040NR. The income you describe woiuld not be considered US sourced.
Leave your IRA until you retire and draw accordingly. Or, when you go back, convert to Roth (which you probably should have done before leaving).
Sorry that you did not tyhink this through before jumping to canada.
Unless you formally give up GC -- even if it is confiscated - -you must continue to file a full 1040 (your wife does also of course).
If you do renounce, then you have no need tofile unless you have US income, and then only a 1040NR. The income you describe woiuld not be considered US sourced.
Leave your IRA until you retire and draw accordingly. Or, when you go back, convert to Roth (which you probably should have done before leaving).
Sorry that you did not tyhink this through before jumping to canada.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I found this http://toronto.usconsulate.gov/visas/dh ... ssing.html
It says I need to complete form I-407, include my GC and mail it to the " Visa Unit, U.S. Consulate General Toronto"
Once they receive it, I will officially revert to nonimmigrant status.
Then, they will return a copy of the I-407 which I will keep as receipt (in case I ever need obtain a US visa (if I need to visit some relatives), before I receive my Canadian passport)
It also says I will need to mail a copy of i407 to the U.S. tax authorities.
It also says "Abandoning your LPR status does not prevent you from immigrating to the U.S. in the future"
So, I'm thinking since I was in US 6 months and Canada 6months. I will file 1040 in US and will include my salary earned in Canada in the 6 months spent in Canada. At this point, which treaty needs to be used to be able not to be taxed (double) for this additional Canadian income, for which I already paid taxes to CRA? (I received 40k in salary in 6 months of living in Canada)
2011 tax year I have no US income, and I will surrender my GC before April 15, 2012, would you recommend to file 1040NR showing no income? or simply don't file anything?
for tax purposes, is the date I gave up my LPR (us person) the day I became a permanent resident of Canada(mid 2010)? or is it the date I mail and surrender my GC (let's say January 1st 2011)?
It says I need to complete form I-407, include my GC and mail it to the " Visa Unit, U.S. Consulate General Toronto"
Once they receive it, I will officially revert to nonimmigrant status.
Then, they will return a copy of the I-407 which I will keep as receipt (in case I ever need obtain a US visa (if I need to visit some relatives), before I receive my Canadian passport)
It also says I will need to mail a copy of i407 to the U.S. tax authorities.
It also says "Abandoning your LPR status does not prevent you from immigrating to the U.S. in the future"
So, I'm thinking since I was in US 6 months and Canada 6months. I will file 1040 in US and will include my salary earned in Canada in the 6 months spent in Canada. At this point, which treaty needs to be used to be able not to be taxed (double) for this additional Canadian income, for which I already paid taxes to CRA? (I received 40k in salary in 6 months of living in Canada)
2011 tax year I have no US income, and I will surrender my GC before April 15, 2012, would you recommend to file 1040NR showing no income? or simply don't file anything?
for tax purposes, is the date I gave up my LPR (us person) the day I became a permanent resident of Canada(mid 2010)? or is it the date I mail and surrender my GC (let's say January 1st 2011)?
I just went ahead and filled out i407, included by GC and mailed it out to the US consulate. I should soon receive proof that my GC has been officially surrendered, once they send me a letter back. Once I get this letter, I'm supposed to send a copy of it to IRS, so they know that I'm not a US PR anymore.
I guess what I need to figure out now is when did I stop being a US resident for Tax/IRS purposes.
Is it in Mid 2010 (when I entered Canada and received my PR)?
Is it Dec 31, 2010?
Is it Dec 31, 2011?
or is it Today?
I guess what I need to figure out now is when did I stop being a US resident for Tax/IRS purposes.
Is it in Mid 2010 (when I entered Canada and received my PR)?
Is it Dec 31, 2010?
Is it Dec 31, 2011?
or is it Today?
You have no choice bu to file a fuill year MFJ 1040 for 2011. You will both report all world income and then exclude your Cdn wages by 2555 and/or use 1116 to take credit for Cdn taxes.
For 2012, you cannot simply file a 1040NR, since you will have a GC on January 1st. Likely, you will file a similar return as for 2011, MFJ 1040, excluding your Cdn wages and/or taking credit for Cdn taxes paid.
Then that will be it. You spouse can then file MFS without you or MFJ with you in the future.
For 2012, you cannot simply file a 1040NR, since you will have a GC on January 1st. Likely, you will file a similar return as for 2011, MFJ 1040, excluding your Cdn wages and/or taking credit for Cdn taxes paid.
Then that will be it. You spouse can then file MFS without you or MFJ with you in the future.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
My response was posting before your last entry.
You will likely file an MFJ 1040 for entire 2011 as I outlined above. 2012 and beyond will be upto your spouse. If you have kids, and she does not work, MFJ can usually get you a free $1000/child in refund from IRS.
You will likely file an MFJ 1040 for entire 2011 as I outlined above. 2012 and beyond will be upto your spouse. If you have kids, and she does not work, MFJ can usually get you a free $1000/child in refund from IRS.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
nelsona, thanks for the help.
As I keep researching, more and more daunting forms are poping up, and new questions arise, would appreciate your guidance.
To summarize here are the facts:
1) Wife is a US citizen, will not work in Canada
2) I mailed out (surrendered) my US GC yesterday, hope to get a confirmation letter soon.
3) For 2010 both my wife and I are considered US resident for tax purposes, thus we need to file 1040 (either MFJ or MFS, I'm trying to figure out that maybe by filing MFS, although some deductions will not apply, but perhaps will have help to separate our financial matters so she doesn't need to report anything to IRS in coming years as long as she doesn't work and earn any money)
If we file 1040MFJ, would we need to include only one set of 1116 & 2555 for me, since she didn't work in Canada?
form1116 (Foreign Tax Credit)
form2555 (Foreign Earned Income)
Also, it appears that if I file 1040 (as opposed to 1040NR), I must also file TD F 90-22.1 "REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNT" if I held funds in any Canadian bank during 2010?
a)
In that form it says "Maximum value of account during calendar year reported",
does that mean I have to enter the highest balance I held at any time during 2010? or the balance as it is right now?
b)
When time comes for 2012, and I will not need to file anything anymore. But my wife will be filing 1040 with no income Married Filing Single each year. Since all our financial accounts are under my name, she will not be required to file TD F 90-22.1 each year. Is that correct?
c)
do I ever need to file Form 8854 (Initial and Annual Expatriation Statement), or can I just skip this, since I have never been a US Citizen?
again, I greatly appreciate your advice, my US accountant has not done a granular analysis and hasn't brought up these forms/issues to me. So, it appears I must dive into these matters and make sure everything gets sorted properly.
As I keep researching, more and more daunting forms are poping up, and new questions arise, would appreciate your guidance.
To summarize here are the facts:
1) Wife is a US citizen, will not work in Canada
2) I mailed out (surrendered) my US GC yesterday, hope to get a confirmation letter soon.
3) For 2010 both my wife and I are considered US resident for tax purposes, thus we need to file 1040 (either MFJ or MFS, I'm trying to figure out that maybe by filing MFS, although some deductions will not apply, but perhaps will have help to separate our financial matters so she doesn't need to report anything to IRS in coming years as long as she doesn't work and earn any money)
If we file 1040MFJ, would we need to include only one set of 1116 & 2555 for me, since she didn't work in Canada?
form1116 (Foreign Tax Credit)
form2555 (Foreign Earned Income)
Also, it appears that if I file 1040 (as opposed to 1040NR), I must also file TD F 90-22.1 "REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNT" if I held funds in any Canadian bank during 2010?
a)
In that form it says "Maximum value of account during calendar year reported",
does that mean I have to enter the highest balance I held at any time during 2010? or the balance as it is right now?
b)
When time comes for 2012, and I will not need to file anything anymore. But my wife will be filing 1040 with no income Married Filing Single each year. Since all our financial accounts are under my name, she will not be required to file TD F 90-22.1 each year. Is that correct?
c)
do I ever need to file Form 8854 (Initial and Annual Expatriation Statement), or can I just skip this, since I have never been a US Citizen?
again, I greatly appreciate your advice, my US accountant has not done a granular analysis and hasn't brought up these forms/issues to me. So, it appears I must dive into these matters and make sure everything gets sorted properly.
What you decide to do for 2010 or 2011 will have absolutely no bearing on future filings, so your only concern will be paying the least IRS tax.
For 2010 that will be MFJ without question. You seem to think you have a choice to file 1040NR. You don't. Not for 2010, and to choose to file partial 1040NR/1040 for 2011 would cost you plenty more in taxes.
For 2011, since you should file a full year 1040 in any event (it would be pointless to file dual status, since you would be considered US resident until at least today, so, since you would be using the exclusion for Jan-September, you might as well use it for Jan-December.
Since that is the case, MFJ is also the way to go.
How your spouse files after this year will depend solely on her situation. If she has an RRSP, she must file a 1040, FBAR, and 8891, even if she has no income.
2555 is to exclude wages. One 2555 will do regardless if one or both of your earned wages.
1116 is based on type of income. Again, it doesn't matter if one or both of you had the income, it all goes on the 1116 for that type.
For 2010 and 2011, you are considered a US taxpayer, so forget 1040NR.
Thus you both haave to abide by FBAR and 8891. Your spouse will always have FBAR filing if she has a joint account with you, or an RRSP.
(a)FBAR is for the calendar year in question. for 2010 it's 2010. Remeber to include ALL accounts you had: bank, RRSP, savings, busiess accounts, joint accounts, etc.
(b) if she has any access to an account with you, she needs to file FBAR. How your spouse files after this year will depend solely on her situation. If she has an RRSP, she must file a 1040, FBAR, and 8891, even if she has no income.
(c) you need to look at the rules for 8854. It applies not only to US citizens, but to anyone who lived in US for a certain amount of time, even without a GC.
For 2010 that will be MFJ without question. You seem to think you have a choice to file 1040NR. You don't. Not for 2010, and to choose to file partial 1040NR/1040 for 2011 would cost you plenty more in taxes.
For 2011, since you should file a full year 1040 in any event (it would be pointless to file dual status, since you would be considered US resident until at least today, so, since you would be using the exclusion for Jan-September, you might as well use it for Jan-December.
Since that is the case, MFJ is also the way to go.
How your spouse files after this year will depend solely on her situation. If she has an RRSP, she must file a 1040, FBAR, and 8891, even if she has no income.
2555 is to exclude wages. One 2555 will do regardless if one or both of your earned wages.
1116 is based on type of income. Again, it doesn't matter if one or both of you had the income, it all goes on the 1116 for that type.
For 2010 and 2011, you are considered a US taxpayer, so forget 1040NR.
Thus you both haave to abide by FBAR and 8891. Your spouse will always have FBAR filing if she has a joint account with you, or an RRSP.
(a)FBAR is for the calendar year in question. for 2010 it's 2010. Remeber to include ALL accounts you had: bank, RRSP, savings, busiess accounts, joint accounts, etc.
(b) if she has any access to an account with you, she needs to file FBAR. How your spouse files after this year will depend solely on her situation. If she has an RRSP, she must file a 1040, FBAR, and 8891, even if she has no income.
(c) you need to look at the rules for 8854. It applies not only to US citizens, but to anyone who lived in US for a certain amount of time, even without a GC.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Great, here where I am so far:
We will file 1040MFJ for 2010 and 2011.
My wife does not and will not have a RRSP
I will not have RRSP in 2010 or 2011
We do not need to file 8891 (since no RRSP)
I read the rules on 8854 and concluded that while I was a GC holder, I wasn't a long-term resident (since I didn't hold a GC for 8 years), so will not file this.
We will file FBAR for 2010 and 2011 (only one of my accounts is joint with wife, unfortunately I held a balance over 10k in 2010 and 2011 at some points during these years, so she will have to file FBAR for these 2 years. In 2012 and onward I will keep the balance in that account under $10k throughout the year, so she doesn't have to file FBAR. One less form to worry about.)
On a website (taxmeless.com) I found the following:
========================
Does more than one form need to be filed for a husband and wife owning a joint account?
No, if the names and social security numbers of the joint owners are fully disclosed on the filed FBAR. This is not stated in the instructions for the FBAR but it is the practice of the IRS to accept one filing for both when the names of the joint owners are fully disclosed. This practice only applies to joint owners who are husband and wife and who reside at the same address. Other joint owners must file separate FBARs.
========================
For 2010/2011, would you recommend filing separate FBAR and mail separately? or should I squeeze her name and SSN onto my same form? I see in TD F 90-22.1 PartII (info on accounts owned separately) and in PartIII (info on accounts owned jointly). A bit confusing.
Again, I cannot expresses how grateful I am for you bringing me up to date on these issues.
We will file 1040MFJ for 2010 and 2011.
My wife does not and will not have a RRSP
I will not have RRSP in 2010 or 2011
We do not need to file 8891 (since no RRSP)
I read the rules on 8854 and concluded that while I was a GC holder, I wasn't a long-term resident (since I didn't hold a GC for 8 years), so will not file this.
We will file FBAR for 2010 and 2011 (only one of my accounts is joint with wife, unfortunately I held a balance over 10k in 2010 and 2011 at some points during these years, so she will have to file FBAR for these 2 years. In 2012 and onward I will keep the balance in that account under $10k throughout the year, so she doesn't have to file FBAR. One less form to worry about.)
On a website (taxmeless.com) I found the following:
========================
Does more than one form need to be filed for a husband and wife owning a joint account?
No, if the names and social security numbers of the joint owners are fully disclosed on the filed FBAR. This is not stated in the instructions for the FBAR but it is the practice of the IRS to accept one filing for both when the names of the joint owners are fully disclosed. This practice only applies to joint owners who are husband and wife and who reside at the same address. Other joint owners must file separate FBARs.
========================
For 2010/2011, would you recommend filing separate FBAR and mail separately? or should I squeeze her name and SSN onto my same form? I see in TD F 90-22.1 PartII (info on accounts owned separately) and in PartIII (info on accounts owned jointly). A bit confusing.
Again, I cannot expresses how grateful I am for you bringing me up to date on these issues.
As I said, long-term resident does not depend only on GC. Look at rules again based on your RESIDENCE IN US and GC.
Since the accounta are joint, you can submit the FBAR under your name, with her as the joint holder (these accounts go in part III), no need to squeeze anything.
Since the accounta are joint, you can submit the FBAR under your name, with her as the joint holder (these accounts go in part III), no need to squeeze anything.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Keep in mind, too, that it is not ownership of the accounts which determines the need for FBAR filing, but access to or control over them. For example, if your wife has power of attorney for you then she has an FBAR obligation to report all of your accounts under her name, though you would appear as owner. My wife had to file FBAR for all of her (entirely Canadian) elderly mother's accounts, as she has power of attorney for her mother, who suffers from dementia.